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A Comparative Perspective

Edited by Werner Baer and David Fleischer

This book compares the successes and failures of the development and growth processes of Argentina and Brazil. It provides important insights into the different performances of these economies through a series of comparative essays written by Argentinian and Brazilian economists.

Chapter 11: The Evolution of Income Distribution in Brazil

Monograph Chapter

Extract

11. The evolution of income distribution in Brazil1 Rodolfo Hoffmann 11.1 INTRODUCTION This chapter analyzes the evolution of income distribution in Brazil, a country known worldwide for its deep inequality. Changes in inequality are examined in more detail from 1992 onwards. Section 11.2 recalls the historical conditions of inequality in Brazil, in particular the polemics around the increase in inequality between 1960 and 1970. Section 11.3 describes the method of decomposition of the Gini index into shares related to income components, in order to identify what has caused the changes in inequality. It shows how to measure the degree in which those income components are progressive or regressive in their effect on the overall income distribution. In Section 11.4 this technique is used to analyze the evolution of the per capita household income in Brazil in the period 1995–2008. Section 11.5 studies the determining factors of the changes in income inequality among occupied persons in the period 1992–2008, fitting earnings equations for every year. Finally, Section 11.6 presents brief conclusions. 11.2 SOME HISTORY The wide inequality of the income distribution observed in Brazil is the result of historical conditions in which big tracts of land where originally distributed by the Portuguese king, and afterwards there was never a revolution that radically dismantled the previous power system. Ironically, even the country’s independence was proclaimed, in 1822, by the son of the king. The late abolition of slavery, in 1888, was not complemented by anything that could have made easier...

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